India to Regulate Cotton Exports Amid Surging Prices, Lower Crop Output

Indian Textiles and Commerce Minister Piyush Goyal has called for a “hassle-free supply” of cotton and yarn to domestic industry before the “surplus” is exported overseas.

According to a government press release on Wednesday, Goyal chaired a meeting of cotton industry stakeholders in New Delhi on Tuesday, against the backdrop of cotton prices hitting an 11-year-high.

The prices of raw cotton in the world’s biggest cotton-producing country shot up 40 percent between October and April, which is the cotton-growing season in the country.

Raw cotton was trading for 100,000 INR (roughly $1,289) a candy (356kg) in the country this week, in line with a global spike in the price of cotton.

According to independent estimates, India’s cotton exports rose to $9.9Bln between April 2021 and February 2022. In April 2022, cotton exports increased were 56 percent higher than a year earlier in April 2021.

At the same time, data available to Sputnik shows that there was a shortfall of 9Bln bales (a bale in India weighs around 176kg - about half a candy) in domestic cotton arrivals between October 2021 and April 2022, compared with the same period last year.

Cotton Production in India

The decision to regulate exports could affect countries such as Bangladesh, Vietnam, and China, which are primary importers of Indian cotton.

Goyal also announced the launch of the Cotton Council of India - a group which would include officials from different ministries. The first meeting of the council will be held on 28 May and it will look at ways of “effecting a tangible improvement” in India’s cotton industry.

In the meeting, the minister assured industry stakeholders that the federal duty exemption of 11 percent on cotton imports would remain in place until 30 September this year to ease imports of raw material.

Industry executives present at the meeting told Goyal that the import duty waiver on cotton imports, which has been in place since 13 April, has failed to lower cotton prices as the raw material has been unable to reach the cotton yarn units, which is where the textile and apparel industry get processed cotton.

“The price of imported cotton, which was a little lower, compared with the Indian cotton before the withdrawal of the import duty on cotton, has suddenly been increased by 15 percent or so, immediately after the Government of India announced the withdrawal of import duty,” Dr K Venkatachalam, chief adviser of Tamil Nadu Spinning Mills Association, told Sputnik.

“Today the price of imported cotton is 15 percent more than the price of Indian cotton. Logistic constraints and contractual processes are delaying the arrival of the import of cotton and the imported cotton may not enter India before the end of July 2022,” he added.

The southern state of Tamil Nadu has the largest share of textile exports of all India's states. The cotton weavers in Tamil Nadu went on a 12-day strike last month to protest against the rising prices of cotton, thus obstructing overall output.